WINNIPEG, MB, May 25, 2023 /CNW/ - Lanesborough Real Estate Investment Trust ("LREIT") (TSXV: LRT.UN) today reported its operating results for the quarter ended March 31, 2023. The following comments in regard to the financial position and operating results of LREIT should be read in conjunction with interim management's discussion & analysis – quarterly highlights and the interim financial statements for the quarter ended March 31, 2023, which may be obtained from the SEDAR website at www.sedar.com.
ANALYSIS OF OPERATING RESULTS
|
Analysis of Income and Comprehensive Income
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|
Three Months Ended March 31
|
|
|
|
|
Increase (Decrease)
in Income
|
|
2023
|
2022
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Amount
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%
|
|
|
|
|
|
|
Rentals from investment properties
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$ 3,481,753
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$ 4,680,532
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$ (1,198,779)
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(26) %
|
|
Rental loss insurance proceeds (reversal of proceeds)
|
(65,012)
|
-
|
(65,012)
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- %
|
|
Property operating costs
|
(2,799,329)
|
(3,429,506)
|
630,177
|
18 %
|
|
Net operating income(NOI)
|
617,412
|
1,251,026
|
(633,614)
|
(51) %
|
|
Interest income
|
21,654
|
44,401
|
(22,747)
|
(51) %
|
|
Interest expense
|
(2,643,383)
|
(2,957,216)
|
313,833
|
11 %
|
|
Trust expense
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(265,074)
|
(574,726)
|
309,652
|
54 %
|
|
Loss before the following
|
(2,269,391)
|
(2,236,515)
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(32,876)
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(1) %
|
|
Loss on sale of investments and investment property
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(41,835)
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-
|
(41,835)
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- %
|
|
Fair value adjustments
|
4,055,639
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(849,392)
|
4,905,031
|
577 %
|
|
Gain on extinguishment of Series G Debentures
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-
|
19,797,489
|
(19,797,489)
|
(100) %
|
|
Income before discontinued operations
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1,744,413
|
16,711,582
|
(14,967,169)
|
(90) %
|
|
Loss from discontinued operations
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(588,967)
|
(493,016)
|
(95,951)
|
(19) %
|
|
Income and comprehensive income
|
$ 1,155,446
|
$ 16,218,566
|
$ (15,063,120)
|
(93) %
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Overall Results
LREIT completed Q1-2023 with income and comprehensive income of $1.2 million, compared to income and comprehensive income of $16.2 million during the first quarter of 2022, representing a decrease in income and comprehensive income of $15.1 million. The decrease mainly reflects the fact that income and comprehensive income was comparatively high in the prior period due to the $19.8 million gain which resulted upon the extinguishment of Series G Debentures as well as a $0.6 million decrease in NOI. The decrease was partially offset by a $4.9 million increase from fair value adjustments, a $0.3 million decrease in interest expense and a $0.3 million decrease in Trust expense.
The gain on extinguishment of the Series G Debentures was the result of the exchange transaction completed on February 24, 2022 pursuant to which the Series G Debentures, in the aggregate principal amount outstanding of $24.8 million, and all accrued or unpaid interest owing thereon in the amount of $8.2 million, were exchanged for 659.9 million Trust Units. The Trust Units had a fair value of $13.2 million and debt in the aggregate amount of $33.0 million was extinguished, resulting in a gain of $19.8 million.
The decrease in NOI for the investment properties is mainly due to a $1.2 million decrease in rental revenues, partially offset by a $0.6 million decrease in property operating costs, both of which are primarily attributable to the sales of Laird's Landing, Lakewood Apartments and Westhaven Manor on January 31, 2023 and the sale of Woodland Park on March 15, 2022.
The increase from fair value adjustments is mainly due to a $4.1 million gain from fair value adjustments during Q1-2023, compared to a $0.8 million loss from fair value adjustments during Q1-2022. The increase in Q1-2023 was primarily due to an increase in the carrying value of the properties located in Fort McMurray, Alberta as a result of an increase in the normalized revenue considered to be achievable in the market in light of the continued favourable occupancy trend. Losses from fair value adjustments recognized during Q1-2022 mainly reflected an increase in the long–term vacancy assumptions used in the valuation of properties in the Fort McMurray properties segment as a result of external market data obtained at the time.
The decrease in interest expense mainly reflects a $0.2 million decrease in interest on the debentures due to the exchange of the Series G Debentures for Trust Units on February 24, 2022 and a $0.1 million decrease in the amortization of transaction costs. The cash component of mortgage loan interest remained virtually unchanged, increasing by $0.0009 million in Q1-2023, compared to Q1-2022. Notwithstanding the nominal increase, the increase mainly reflects an increase in the weighted average interest rate on mortgage loans, which increased from 5.7% as of March 31, 2022 to 7.2% as of March 31, 2023 almost entirely offset by the impact of a reduction in the average mortgage loan principal balance outstanding during Q1-2023. The decrease in the mortgage loan debt was the result of the sales of Laird's Landing, Lakewood Apartments and Westhaven Manor on January 31, 2023 and the sale of Woodland Park on March 15, 2022 as well as lump–sum and regular principal payments made during 2022 and Q1-2023.
The decrease in Trust expense mainly reflects a $0.2 million decrease in professional fees primarily attributable to the exchange of the Series G Debentures for Trust Units during Q1-2022.
ABOUT LREIT
LREIT is a real estate investment trust, which is listed on the TSX Venture Exchange under the symbol LRT.UN (Trust Units). For further information on LREIT, please visit our website at www.lreit.com.
This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Lanesborough Real Estate Investment Trust
View original content: http://www.newswire.ca/en/releases/archive/May2023/25/c3534.html